Cramer: Rails 'have bottomed'

Looking for stocks on the cheap? Take a ride on railroad stocks, CNBC's Jim Cramer said Monday.

"I think the rails have bottomed. Now, the rails have been brought down by crude-by-rail [orders] and by coal. Coal, they already told you it was going to be down 20 percent; crude by rail, we already know it was coming down," Cramer said on "Squawk on the Street."

"These stocks are cheap, if you do year-over-year analysis. That's what people are starting to do," he said.

Rail transportation giants Norfolk Southern and CSX have seen their stocks fall 32 percent and 28 percent in the last year, respectively. On Monday, however, Norfolk and CSX shares were up 1 percent and 4 percent, respectively.

Bank of America Merrill Lynch also upgraded CSX's stock to "buy" from "neutral," and raised its price target to $28 from $25.

"I know people at home think this is so stupid, ... but CSX has bottomed here, and I'd be willing to buy it," Cramer said.

DISCLOSURE: Cramer's trust did not own shares of CSX or Norfolk Southern when this article was published.